After decades as one of the world’s leading cosmetics companies, Revlon filed for bankruptcy in the United States on Thursday.
Its leaders assured that the debt restructuring process will allow it to continue to serve the market without ceasing its operations.
“Today’s announcement will allow Revlon to bring our consumers the iconic products we have offered for decades, while providing us with a clearer path for our future growth,” said Debra Perelman, CEO of the company. .
The company announced that after receiving court approval, it would get US$575 million from its financiers to continue production.
Earlier this year, Revlon warned it was facing “liquidity constraints brought on by current global challenges, including supply chain disruption and rising inflation.”
It had $3.3 billion in long-term debt at the end of March, and reports of its impending bankruptcy last week sent its stock price plummeting.
Currently, its products are sold in more than 150 countries, although its market position has suffered a sharp decline. From one of the biggest cosmetic brands in the world, it now ranks 22nd.
These are some of the reasons behind the declaration of bankruptcy of this iconic brand.
Appearance of new competitors
Revlon’s decline began in the 1990s, when the company failed to adapt to changing consumer preferences, later turning to more opaque lipstick shades rather than bright red.
This gap opened up opportunities that their competitors knew how to take advantage of.
Revlon has lost market share not only to traditional rivals, but also to the rise of new brands carried by well-known personalities such as Rihanna’s Fenty Beauty or Kylie Jenner’s Kylie Cosmetics.
supply chain issues
Additionally, Revlon said supply chain disruptions have caused intense competition for ingredients used in cosmetics.
Faced with this situation, suppliers have requested that orders be paid in advance.
That caused “a shortage of the necessary ingredients in the company’s portfolio,” Revlon chief restructuring officer Robert Caruso said, according to bankruptcy filings in US courts.
“For example, a tube of Revlon lipstick requires 35 to 40 raw materials and components, each of which is essential to bring the product to market,” he added.
Revoln, like other companies around the world, has also been hit by an employee shortage.
Additionally, its sales fell 21% in 2020, and while over the past year they have recovered 9.2%, its revenue is still about $2.4 billion lower than that. that they were recording before the arrival of covid-19.
an international brand
Revlon was founded in 1932 by brothers Charles and Joseph Revson along with Charles Lachman.
Soon after, she began selling nail polish, and by the mid-1950s it had become an international brand.
In 1970, it broke racial barriers by being the first beauty company to hire a black model: Saomi Sims.
In the following decade, she shook up the beauty market by calling on both well-known models and rising stars for her advertising campaigns, with models like Iman, Cindy Crawford, Claudia Schiffer… In 1985, she was bought out by MacAndrews & Forbes, a company of billionaire businessman Ronald Perelman.
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BBC-NEWS-SRC: https://www.bbc.com/mundo/noticias-61848811, IMPORT DATE: 2022-06-17 23:30:05
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